Investment income – Prosperity abounds!

This seems like the week for stats. The latest Statistics Canada release is the number of taxfilers reporting investment income and the amount of investment income for 2004. This is reported income from investments like mutual funds, dividends, etc.

You may or may not be surprised to hear that in addition to having the second lowest percentage of folks reporting investment income, we have the second lowest level of investment income per capita among the 10 provinces with only Newfoundland faring worse.

Now, you know what I am going to say. Sorry to repeat myself. Sorry to Al Hogan for reporting another bone fide statistic that he won’t publish.

But the truth is this. Low investment income means less financial security (yes compared to our friends in NS and PEI) and it means less taxes for government.

We need to generate more wealth which will lead to higher investment income which will lead to more taxes paid.

PS -What’s up in Nova Scotia? Did the provinces Great Aunt Nellie just pass away in Ontario and leave her billions to Nova Scotia? Investment income in that province is up 34% since 1999 – faster growth than any other province in Canada – except, of course, the cowboy hat province (up 46%).

Oh, by the way, you want my back of the matchbook solution for this problem? Real wealth is generated by entrepreneurs so we need to attract a number of large multinational firms to New Brunswick. They invest billions. Hire thousands. Entrepreneurs in construction, retail, services and subcontracted manufacturing will spring up to service the economic activity generated by the multinationals creating an overheating economy which will lead to suboptimal competitive markets and create a number of new millionaires and that will raise the level of aggregate investment income closer to the Nova Scotia numbers.

0 Responses to Investment income – Prosperity abounds!

Great stats, keep them coming. I come for the stats, however,your conclusions are off base. You said it was the number of people reporting investment income NOT the amount of investment in the province vs. the population.

That means two things, first, investment income is taxes which goes to the feds, not the province, and second, large multinational firms setting up shop in NB would do nothing to change those numbers unless their pay was high enough that New Brunswickers would have more investment income (which is dubious considering our call centre past, although more jobs obviously means at least a higher probability that the numbers will rise).

There is a chance that NB’ers are just dumber than others and put all their money into savings, but that’s doubtful. The other things to look at would be cost of living (specifically energy?), since I would assume that since RRSP’s are tax deductible, any ‘disposable income’ that isn’t used up is put into investments.

However, I think the BIG thing to look at would be union activity. PEI would have far more public servants per capita, meaning all levels of government-people who earn more. New Brunswick is notorious for it’s anti-unionism, which I think is due to Irving owning all the papers. However, union members typically have higher wages than others in the ‘private sector’, which means more money to put into investments. Nova Scotia also has a burgeoning university industry, with, I think, six universities available for federal research funding. Universities also tend to pay pretty well.

Entrepreneurs who ‘invest’ in a small business would lower the numbers even further, since that type of ‘investment’ will not lead to investment income, but simply revenue and profits. At least that’s how I read the numbers.